European stocks seen slipping as traders digest French election result

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********* stocks seen slipping as traders digest French election result

LONDON — ********* stocks were set to fall at the open on Monday as markets reacted to an expected hung parliament in France after a surprise win for a left-wing coalition of parties.

France’s CAC 40 was seen falling 37.9 points to 7,631, according to IG, and the euro was down 0.18% against the dollar.

The U.K.’s FTSE 100 index and Germany’s DAX are both expected to fall around 6 points, while Italy’s FTSE MIB is expected to slip 115 points at the open.

France’s left-wing New Popular Front won the largest number of seats in this weekend’s parliamentary elections, scuppering an expected surge for the far-right. However, the coalition ******* to secure an absolute majority, early data showed, leaving markets digesting the possibility of a hung parliament.

Deutsche Bank strategists led by Jim Reid noted that the tactical vote to block the far-right had worked so well that it “swung the pendulum in the opposite direction but without anyone having an overall majority.”

Supporters of the left wing union, New Popular Front, gather at the Place de la Republique on July 7, 2024 in Paris, France following the defeat of the far-right in France’s legislative elections.

Nathan Posner/Anadolu via Getty Images

“The NPF have the most fiscally aggressive program in terms of both spending and taxation and the market will be suspicious that the prospect of them being in government now or later will bring higher deficits with the associated concerns about debt sustainability and tense relations with Europe,” they wrote Monday.

“Last night the far-left were already talking about wealth taxes and increases on taxes on corporates which won’t be market-friendly. However trying to build a government that has any kind of stability looks a very high bar this morning. Political paralysis for the next 12 months seems the most likely outcome.”

It comes after a general election in Britain last week which saw the opposition Labour Party win a landslide victory, unseating the Conservatives after 14 years.

In corporate news, soft drinks maker Britvic has agreed a takeover bid of £3.3 billion ($4.2 billion) from Carlsberg, at an offer of 1,290 pence per Britvic share. This was an improved bid from Carlsberg which first offered 1,200 pence per share but was rejected.

There are no major corporate earnings due Monday. It’s also quiet on the data front, with just ******* trade data due.

In Asia-Pacific, stocks were mixed Monday. In the ******* States, futures ticked lower as investors looked ahead to inflation data for hints on this year’s market rally and the next steps by the Federal Reserve. The June consumer price index is due Thursday, with producer price index data due Friday.

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